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3 Canadian Retail Stocks to Load Up on As We Head Into the Summer Holiday Season

The TSX Index continues to flirt with new all-time highs coming off the back of a strong retail sales report for February.

In this post we’ll take a closer look at three retail stocks getting a lift from the trends that are dominating the Canadian retail landscape these days.

Canadian Tire Corporation Limited Class A (TSX:CTC.A) is one of Canada’s leading supplier of automotive aftermarket parts and also carries a wide variety of inventory catering to Canadians outdoor and recreational needs.

With weather across the country beginning to warm up, many Canadians will start spending more time outdoors tending to their lawns and gardens, entertaining on their outdoor patios and preparing delicious meals on their home barbeques.

Canadian Tire is going to be many Canadian’s one-stop shop for most, if not all of these needs.

The CTC shares have rebounded as of late too, with the stock showing solid relative strength against the rest of the market and the TSX Composite Index.

Meanwhile, one of the pervading trends in retail these days has been e-commerce as a viable substitute to traditional brick-and-mortar retail strategies.

While some retailers like Walmart Inc have opted in favour of an omni-channel strategy that combines the strengths of a chain’s physical footprint with the accessibility and convenience of shopping online, leading discount chain Dollarama Inc (TSX:DOL) has chosen to head in a different direction.

As it stands today, the company has virtually no online presence. While it’s certainly an unconventional choice, Dollarama’s SKU’s probably aren’t suitable for online commerce anyway.

With average selling prices limited to $1 to $4 per unit, shipping costs would far outweigh the benefits. As a result, the company finds itself operating a strong defensive niche, at least for now.

The DOL stock is up over 23% so far this year following a fresh multi-year low late in 2018.

The latest retail report showed that sales rose in February by less than a full percentage point, but the undisputed highlight were e-commerce sales, which were 23.8% higher over the year-ago period.

While e-commerce sales accounted for still less than 5% of Canada’s total retail sales, the growth is certainly encouraging for online sellers.

Within the online space, Canada’s own Shopify Inc (TSX:SHOP)(NYSE:SHOP) remains a market leader in providing entrepreneurs and small and medium-sized business owners with the tools and resources they need in order to expand their sales online.

Following a slower than usual 2018, SHOP stock is back off to the races again, incredibly, up more than 62% so far through the first four months of 2019.

Trading at a forward price-to-earnings multiple well over 100 times earnings, the SHOP shares certainly aren’t “cheap” by historical standards, but if businesses continue to invest in online channels at the same clip as they have been for the past 10 years, it’s certainly difficult to envision this being a bad outcome for SHOP’s shareholders.

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Fool contributor Jason Phillips has no position in any of the stocks mentioned. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of Shopify and Shopify. Shopify is a recommendation of Stock Advisor Canada.

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